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CHROMA Call Transcript 2020

Jul 30, 2020

52029_rns_2020-07-30_389a6eaa-1c3b-4125-a87c-42fd897ba70a.pdf

Call Transcript

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CHROMA ATE INC. 2020.2Q Earnings Conference

Paul Ying, CFO Leo Huang, Chairman & CEO

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30[th] July, 2020

1

Disclaimer

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This presentation contains some forward-looking statements that are subject to substantial risks and uncertainties. Typically, these statements contain words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “plan”, “forecast”, “project”, “predict”, “potential”, “continue”, “may”, “should”, “will”, and “would” or similar words. You should consider these forward-looking statements carefully because such statements are only our expectations or projections about future events, and actual results may differ materially from those expressed or implied by such statements. The forward-looking statements in this presentation include, but are not limited to, growth rates for various markets estimated by third party sources, future products and technology development, widespread market acceptance of the hosted delivery model, future revenue growth and profitability. You should be cautioned that the forward-looking statements are no guarantee of our future performance. The forward-looking statements contained in this presentation are made only as of the date of this presentation and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances, except as required by law.

This presentation and the information contained herein are the property of Chroma Ate Inc.

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2

Agenda

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Corporate ProfileFinancial ReviewOperation HighlightsQ&A

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3

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CORPORATE

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PROFILE

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4

Corporate Profile

• Chroma Group founded in 1984, a world leading own brand turnkey test & automation solution provider, specialized in electronics test and measurement instruments and ATS (auto test system). Businesses cover test and measurement instruments and ATS for various industries, and a turnkey solution as an integration of Test and Measurement , Automation and MES (manufacturing execution system).

  • Key success: Precision, Reliability, Innovation

• Chroma group encompass business unit of Chroma Ate Inc., Modular Assembly System (MAS) and Chroma New Material Corp (CNMC).

  • 2019 Consolidated Sales : NT$ 13.9 billion

  • 2019 Net Income: NT$ 1.9 billion

  • Chroma Group total of 2,972 employees (as of June,

2020)

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Consolidated Chroma Ate Sales Others Consolidated CNMC Sales Consolidated MAS Sales

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16,931
14,901
13,910
17% 29% 7%
11,624
15%
3% 14%
12%
9,692
20%
13%
24%
58% 74% 66% 57% 76%
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2015

2016

2017

2018

2019

5

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Financial Performance

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Consolidated Sales Consolidated
Gross Margin
16,931
14,901
13,910
11,624
9,692
47% 47% 47%
44% 44%
2015 2016 2017 2018 2019
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Sales Revenues Gross Margin
R&D Expenses
R&D Expenses in % of Sales Revenues
8,111
Parent Only 8,018
7,547
7,233
56%
52% 52%
51% 51%
4,539
Chroma Employees : 1,731  (R&D 39%)
17%
15%
14%
13% 13%
937 1,085 1,143 1,172
784
2015 2016 2017 2018 2019
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2018 2019

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6

Financial Performance

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ROE
22%
18%
17%
13% 13%
2015 2016 2017 2018 2019
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Dividend

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Basic EPS Cash dividend
Payout ratio
6.41 6.22
4.53 4.50 4.48
4.20
3.28 3.30
3.00
2.40
2015 2016 2017 2018 2019
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7

Global Operation Sites

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50 93 EST. 1999 EST. 2017 EST. 2008 EST. 2018 EST. 1993 EST. 2001
Operation Distributors
Sites
Netherlands: Germany: Japan: Korea: United States: United States:
Ede Augsburg Shin-Yokohama/ Pangyo Irvine, CA Foothill Ranch, CA
Nagoya/ Osaka Santa Clara, CA Marlborough, MA
Chandler, AZ Mexico:
Ciudad Juarez
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EST. 1998 EST. 1999 EST. 2000 EST. 2001
China/ Shenzhen China/ Beijing China/ Shanghai China/ Dongguan Taiwan: Taoyuan (Headquarters)
EST. 2006 EST. 2011 EST. 2011
EST. 2016
Others:
Thailand: Bangkok
China/ Suzhou China/ Xiamen China/ Chongqing
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EST. 2003 EST. 2009
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Taiwan: Hsinchu Taiwan: Kaohsiung

India: New Delhi/ Mumbai/ Bangalore Thailand: Bangkok Vietnam: Hanoi/ Ho Chi Minh Malaysia: Kuala Lumpur/ Penang Philippines: Manila/ Cebu Indonesia: Jakartar

Quantel:Singapore

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Others: Qingdao/ Zhengzhou/ Xian/Hefei/ Chengdu/ Wuhan/ Hangzhou/ Guangzhou/ Hong Kong

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8

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FINANCIAL REVIEW

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9

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Year 2020.1H Condensed Consolidated Income Statement

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Condensed Consolidated P&L 2020.1H % 2019.1H % YoY %
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2020.1H
%
2020.1H
%
(In Million NTD, except for EPS in NTD)
Net Sales 7,200
100%
6,024
100%
20%
Consolidated Sales of Testing Equipment Business 5,580
78%
4,663
77%
20%
Consolidated Sales of MAS 306
4%
402
7%
(24%)
Consolidated Sales of New Material 1,171
16%
858
14%
36%
Others 143
2%
101
2%
42%
Cost of Goods Sold (3,591)
(50%)
(3,090)
(51%)
16%
Gross Profit 3,609
50%
2,934
49%
23%
Operating Expenses:
General & Administration
Research & Development
(1,646)
(23%)
(644)
(9%)
(1,536)
(26%)
7%
(619)
(10%)
4%
Operating Income 1,319
18%
779
13%
69%
Non-Operating Income (Expenses), net 65
1%
139
2%
(53%)
Income (Loss) Before Tax
Income Tax
1,384
19%
(303)
(4%)
918
15%
51%
(143)
(2%)
112%
Net Income 1,081
15%
775
13%
39%
Other Comprehensive Income (Losses) (69)
(1%)
63
1%
n/a
Comprehensive Income $ 1,012
14%
$ 838
14%
21%
Net Income (Losses) Attributable To:
Shareholders of the Parent
Noncontrolling Interests
1,054
15%
27
-
771
13%
37%
4
-
n/a
$ 1,081
15%
$ 775
13%
39%
EPS (Basic) $ 2.53 $ 1.87
35%
EPS (Diluted) $ 2.51 $ 1.84
36%

10

Balance Sheet Highlights & Financial Ratio

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Consolidated
(In Million NTD)
2020. June 2019. Dec + / - %
Balance Sheet Highlights
Cash & Short Term Investments 3,571 3,455 3%
Inventory 3,293 2,665 24%
Short Term Debt 2,115 2,381 - 11%
Long Term Debt 2,632 2,422 9%
Shareholders Equity 14,630 14,785 - 1%
Total Assets 26,247 25,437 3%
Inventory Turnover (Day) 149 127
AR Turnover (Day) 132 133
AP Turnover (Day) 133 129
Net Debt to Equity (%) 8% 9%
ROE (%) 14% 13%
ROA (%) 8% 8%
Cash Position 2020.1H 2019.1H YoY
EBITDA 1,631 1,165 40%
Cash Flow from Operation 756 771 (2%)
Free Cash Flow 322 (1,514) n/a

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All ROE + ROA has been annualized.

Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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11

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Quarterly Highlights

2020.2Q Key Points

  • Sales Revenue: $ 2,313 million,

up 13% QoQ, up 14% YoY

  • Gross Margin: 52%

  • Operating Margin: 25%

  • Net Income: NT$ 584 million,

up 24% QoQ, up 23% YoY

  • 2020.2Q Highlights:

 The major growth in second quarter is contributed from Semiconductor / Photonics sector, which presented a growth of 21% QoQ and 43% YoY respectively.

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Sales Revenues Gross Margin
Operating Margin
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2,571
2,313
2,053
2,037
1,961
1,541
55% 55%
51% 52% 52%
47%
25% 25%
23%
20% 21%
19%
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2019.1Q 2019.2Q 2019.3Q 2019.4Q

2020.1Q 2020.2Q

12

Year 2020.2Q Condensed Income Statement

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Condensed P&L – Parent Only 2020.2Q % 2020.1Q % QoQ 2019.2Q % YoY
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2020.2Q
%
2020.2Q
%
(In Million NTD, except for EPS in NTD) %
%
Net Sales 2,313
100%
2,053
100%
13%
2,037
100%
14%
Cost of Goods Sold (1,112)
(48%)
(929)
(45%)
20%
(1,002)
(49%)
11%
Gross Profit 1,201
52%
1,124
55%
7%
1,035
51%
16%
Operating Expenses:
General & Administration
Research & Development
(330)
(14%)
(302)
(13%)
(342)
(16%)
(4%)
(337)
(17%)
(2%)
(278)
(14%)
9%
(291)
(14%)
4%
Operating Income 569
25%
504
25%
13%
407
20%
40%
Non-Operating Income (Expenses), net 145
6%
63
3%
130%
106
5%
37%
Income (Loss) Before Tax 714
31%
567
28%
26%
513
25%
39%
Income Tax (130)
(6%)
(96)
(5%)
35%
(37)
(2%)
251%
Net Income $ 584
25%
$ 471
23%
24%
$ 476
23%
23%
Other Comprehensive Income (1)
-
(61)
(3%)
(98%)
(6)
-
(83%)
Comprehensive Income $ 583
25%
$ 410
20%
42%
$ 470
23%
24%
EPS (Basic) $ 1.40 $ 1.13
24%
$ 1.15
22%
EPS (Diluted) $ 1.39 $ 1.12
24%
$ 1.13
23%

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100% owned subsidiaries’ income - New Material: 4m (QoQ ↓ 64%, YoY ↓ 56%), MAS: 16m (QoQ n/a, YoY ↑ 33%).

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13

Year 2020.1H Condensed Income Statement

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2020.1H % 2019.1H % YoY
Condensed P&L – Parent Only
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2020.1H
%
2020.1H
%
(In Million NTD, except for EPS in NTD) %
Net Sales 4,365
100%
3,557
100%
23%
Cost of Goods Sold (2,041)
(47%)
(1,699)
(47%)
20%
Gross Profit 2,324
53%
1,879
53%
24%
Operating Expenses:
Selling and General & Administration
Research & Development
(672)
(15%)
(580)
(13%)
(627)
(17%)
7%
(556)
(16%)
4%
Operating Income 1,072
25%
695
20%
54%
Non-Operating Income (Expenses), net 208
4%
159
4%
31%
Income (Loss) Before Tax 1,280
29%
854
24%
50%
Income Tax (226)
(5%)
(83)
(2%)
172%
Net Income $ 1,054
24%
$ 771
22%
37%
Other Comprehensive Income (62)
(1%)
60
1%
n/a
Comprehensive Income $ 992
23%
$ 831
23%
19%
EPS (Basic) $ 2.53 $ 1.87
35%
EPS (Diluted) $ 2.51 $ 1.84
36%

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Non-operating Income included 100% owned subsidiaries’ income - New Material: 15m (YoY ↓ 12%), MAS: (57m).

14

Balance Sheet Highlights & Financial Ratio

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Parent Only
(In Million NTD)
2020. June 2019. Dec + / - %
Balance Sheet Highlights
Cash & Short Term Investment 461 459 -
Inventory 2,650 2,026 31%
Short Term Debt 1,350 1,615 - 16%
Long Term Debt 2,400 2,285 5%
Shareholders Equity 14,313 14,489 - 1%
Total Assets 22,856 21,807 5%
Inventory Turnover (Day) 206 178
AR Turnover (Day) 119 123
AP Turnover (Day) 120 102
Net Debt to Equity (%) 23% 24%
ROE (%) 15% 13%
ROA (%) 9% 9%
Cash Position 2020. 1H 2019.1H YoY
EBITDA 1,409 974 45%
Cash Flow from Operation 663 961 (31%)
Free Cash Flow 102 (1,240) n/a

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All ROE + ROA has been annualized.

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Free Cash Flow = Net Cash Provided by Operating Activities + (Net Cash used by Investing Activities)

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15

OPERATION HIGHLIGHT

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16

2020.2Q Product Mix and Consolidated Sales Breakdown

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(Unit: Million NTD) 2020. 2Q % QoQ YoY
Test Instruments & Automatic Testing System (ATS) 1,242 54% 6% (1%)
Semiconductor / Photonics Test Solutions 824 36% 21% 43%
Turnkey Solutions 60 2% 9% (8%)
Service & Others 187 8% 26% 38%
Total of Parent Company Sales 2,313 100% 13% 14%
+ Sales from Overseas Operations & Related
Subsidiaries
710 41% 18%
Chroma Consolidated Testing Equipment Business 3,023 79% 18% 14%
MAS 129 3% (27%) -
New Material 612 16% 9% 32%
Others 65 2% (17%) 30%
Consolidated Sales 3,829 100% 14% 17%

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17

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2020.1H Product Mix and Consolidated Sales Breakdown

(Unit: Million NTD)
Test Instruments & Automatic Testing
System (ATS)
Semiconductor / Photonics Test Solutions
Turnkey Solutions
Service & Others
Total of Parent Company Sales
+ Sales from Overseas Operations &
Related Subsidiaries
Chroma Consolidated Testing Equipment
Business
MAS
New Material
Other Subsidiaries
Consolidated Sales
(Unit: Million NTD)
Test Instruments & Automatic Testing
System (ATS)
Semiconductor / Photonics Test Solutions
Turnkey Solutions
Service & Others
Total of Parent Company Sales
+ Sales from Overseas Operations &
Related Subsidiaries
Chroma Consolidated Testing Equipment
Business
MAS
New Material
Other Subsidiaries
Consolidated Sales
(Unit: Million NTD)
Test Instruments & Automatic Testing
System (ATS)
Semiconductor / Photonics Test Solutions
Turnkey Solutions
Service & Others
Total of Parent Company Sales
+ Sales from Overseas Operations &
Related Subsidiaries
Chroma Consolidated Testing Equipment
Business
MAS
New Material
Other Subsidiaries
Consolidated Sales
2020.1H
%
YoY
2019
%
Test Instruments & Automatic Testing
System (ATS)
Semiconductor / Photonics Test Solutions
Turnkey Solutions
Service & Others
Total of Parent Company Sales
+ Sales from Overseas Operations &
Related Subsidiaries
Chroma Consolidated Testing Equipment
Business
Test Instruments & Automatic Testing
System (ATS)
2,410
55%
9%
4,605
57%
Semiconductor / Photonics Test Solutions 1,506
34%
57%
2,311
28%
Turnkey Solutions 115
3%
(30%)
632
8%
Service & Others 334
8%
33%
563
7%
Total of Parent Company Sales 4,365
100%
22%
8,111
100%
+ Sales from Overseas Operations &
Related Subsidiaries
1,214
12%
2,435
5,580
78%
20%
10,546
76%
306
4%
(24%)
1,171
16%
36%
143
2%
42%
1,009
7%
2,097
15%
258
2%
7,200
100%
20%
13,910
100%

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18

Year 2020 Guidance

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Chroma first half consolidated sales revenues reached 7.2 billion NTD, presented a growth of 20% YoY. The Parent Company sales reached 4.4 billion, presented a growth of 22% YoY, mainly contributed from Semiconductor / Photonics testing solutions which increased 57% compared to last year.

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2020 Business Outlook:

  • Rapidly development of AIoT (convergence of AI and IoT) and increasing the applications of high performance chips, such as CPU/GPU, Sensors, RF connections etc. which will be continuously driving the sales growth in Semiconductors / Photonics testing solutions. Particularly from:

  • High Reliability Testing Solutions : Burn-in Test, SLT Test and thermal control / temperature stimulation.

  • VCSEL / ToF testing for 3D sensing

  • OFC (Optical Fiber Communication) testing

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  • The Test Instruments & ATS for power testing solutions are launching new generation of power electronics testing, which will enhance the power density and functional testing for using in green energy, included EV related components, battery module / pack and smart-grid and 5G / Server related power testing.

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19

TECHNOLOGY

Semiconductor/Photonics Test Solutions

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Flexible Test Configuration Tri-Temp System Compatible CIS & ASIC Testing
IC
ATE/SLT/ATE+SLT Dual Compressors Max. 32 Sites
Testing Handler
Max.144 Test Sites Range: – 70℃ to +125℃ Class 1000
1H, ‘20 2H, ‘20
MARKET HPC (CPU/MCU/GPU), ICs, MEMS, PMIC, FPGA, Sensors CIS & ASIC
Full Temp.
+
FT & SLT Hybrid Test System Thermal Control Unit CIS Testing Handler
3200 32000R 3180-IS
SOLUTION
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20

TECHNOLOGY

Semiconductor/Photonics Test Solutions

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Complete PXIe Based ATE ATE RF Options
• Max 512 I/O channels • 5G: Sub 6G
Semiconductor
• Max 100Mhz clock rate • TWS: Signal to noise ratio >110dB
Testing
• Full CRAFT software suite • BT: 5.1 ; WiFi: 6
• Multi-thread Test • S-parameter measurements
1H, ‘20 2H, ‘20
MARKET 8-bit MCU, CIS, TOF, PA, RFIC 32-bit MCU, 5G RF, TWS, BT, WiFi, MEMS
PXIe ATE Series RF Option Ready
3300 3680 & 3380 Series
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SOLUTION
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21

TECHNOLOGY

Semiconductor/Photonics Test Solutions

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Photonics Wafer Tester Photonics Module Tester

Photonics Testing • LIV & NF 2-in-1 test with one probe mark Max. 4 different optical heads

• Measureable Optical Power Range: 1mW~5W Measureable Optical Power Range: 1uW~20W

• Throughput 2300UPH Wavelength Resolution: 0.05nm
1H, ‘20 2H, ‘20
MARKET 3D Sensing, LiDAR, Optical Fiber Communication
Photonics Device Probing LIV & NF Test System Photonics Module Semi-Automatic Test System
58635-LN 58625
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SOLUTION
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22

TECHNOLOGY

Test Instruments & ATS

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MLCC Test Application
Passive
• 5G: 1.0uF, 4Vdc, 0.4x0.2mm
Component Testing
• Communication: 100~300uF, 4~6Vdc, 3.2x2.5mm
• Automobile: 8~100nF, 600~1,000Vdc, 6.1x5.1mm
Two-quadrant Operation Regenerative Simulator
• Bidirectional: Source & Load • High Power Density: 15kVA at 3U
Power Testing
• Power: 0~600V, 0-120A, 6kW-18kW • Universal AC Input : 200Vac~480Vac
• Load Changed +90%~ -90%, <4ms • 100% Regenerative Capability
1H ‘2020 2H, ‘20
MARKET MLCC EV Power Electronics, Green Energy (PV,ESS, PCS, Battery/Fuel Cell), Server Power, Telecom Power, HV UPS
Insulation Tester
11210
Bidirectional DC Power Regenerative Grid Simulator
62000D Series 61815
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SOLUTION

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TECHNOLOGY

Test Instruments & ATS

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Battery Pack Power HIL Test
E-Drive System Power HIL Test
• Power up to: 500kW
EV • Power up to: 500kW
• Supports GB/T, CHAdeMO, and CCS Compatibility
HIL Test System
• Max Speed:18,000rpm
tests
• Supports E-drive Standards: GB/T 18488.1 & 18488.2
• Simulation of vehicle driving cycle conditions
1H, ‘20 2H, ‘20
MARKET Battery Pack and E-Drive for Electric Vehicle
E-Propulsion Test System
Battery Pack Integrated Testbed
1210
8610
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SOLUTION

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Complete Test Solution for EV Powertrain Key Components

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MCU
(Inverter)
Battery
Motor Control Unit ATS
Motor
 Control Board
 Driver Board
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Battery Pack ATS
 5~600kW (parallel)
 Up to 1200V
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E-Propulsion Test System
 Up to 500kW, 18,000rpm
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TECHNOLOGY

Test Instruments & ATS

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Independent 8K Graphics Core
HDMI 2.1: FRL / DSC/ HDCP 2.3 / HEVC
USB-C: DP 1.4 Alt Mode/PD 3.0
Video Testing
Mini LED Backlight Optical Test
Luminance: Accuracy≦ ± 3%,
8K x 4K@60Hz Repeatability (2σ) ≦ ± 0.5%
Chromaticity: Accuracy≦ ± 0.002,
Optical Testing Repeatability (2σ) ≦ ± 0.0006
Light intensity, Uniformity and Mura test
1H, ‘20 2H, ‘20
MARKET Flat Panel Display Mini LED / Micro LED Display
8K Video Pattern Generator
2238
HDMI 2.1 / USB-C Mini LED Backlight Module AOI System
7661-K003
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SOLUTION

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TECHNOLOGY

Turnkey Solutions

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LCM Production Line
• 8K signal test with auto flicker adjustment
FPD Testing
• High capacity cart type aging system

High Throughput: T/T 18s
Pouch Cell Battery Application
• Fully automated defect and 2D/3D
Optical Testing
dimension inspection

High Throughput: 15ppm
1H, ‘20
MARKET Flat Panel Display Battery Cell
LCM Production Line Pouch Cell Battery Multi-Functional AOI system
SOLUTION 7505-K010
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Semiconductor In-line Nanoparticle Monitoring System

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SuperSizer[TM] Series

The Unprecedented Yield Enhancer in theNanometer Range

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SuperSizerTM II SuperSizerTM V Semi S2 certified Semi S2 certified For CMP slurry TS explosion-proof certified For high purity liquid chemicals

US Pat. No 10545082B2 TW Pat. No I583439B US Pat. No 9625365B2 TW Pat. No I549745B

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  • Measures particle sizes down to 3nm

  • High resolution : ~3.5 to 10% of the particle size can be achieved

  • Free from bubble interference

  • 24/7 automatic monitoring

Monitoring Materials

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Slurry NH4OH
IPA
(High Purity PGMEA &
H202
Liquid PGME
Chemicals)
Isobutyl
H2SO4
Propionate
HCI HF
Butyl
Acetate
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Driving Innovation to Success

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Thank You !

Get more information by downloading Chroma ATE Solutions APP

www.chromaate.com

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Copyright © 2020 Chroma ATE Inc. All rights reserved.

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